Earnings call transcript Q1 2023

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Operator

Good afternoon, everyone. And welcome to the TILT Holdings First Quarter Conference Call and Webcast. Today’s call is being recorded for replay purposes. A replay of the audio webcast will be available in the Investors section of the company’s website approximately two hours after the completion of the webcast and will be archived for 30 days.

I would now like to turn the conference call over to the host today, TILT’s Head of Investor Relations and Corporate Communications, Lynn Ricci. ahead. go Please

Lynn Ricci

Good us. Doug. and you thank Thank afternoon, joining for you, everyone,

Earlier XXXX www.sedar.com on first The our www.sec.gov, Securities today, issued we website Commission’s quarter website available the along at at our and Exchange is SEDAR press with earnings our quarterly XX-Q, report at Form on on U.S. and release, release. press www.tiltholdings.com.

the differ prospects statements. that made and by SEDAR. statements regarding in plans which No. may statement and the Amendment SEC remarks Actual indicated this forward-looking future X we in constitute webcast, for Form-XX from on registration afternoon’s during by company such Please as filed with note of the those a disclose materially results various to detail expectations, forward-looking more result factors, TILT

that date. represent our as upon as We our be should subsequent forward-looking representing and remind statements any views not of you today of relied views as any

update any future, such law. the forward-looking in do While otherwise by as to we except obligation may required statements disclaim specifically we so,

today’s are the Principles, presenting with results accordance Accepted in Generally States United GAAP. we of or call, our financial As Accounting

Relations SEC our current measure on and nearest the of can these with GAAP in During We that are in with or their as accordance measures management is TILT’s in results we our financial generally these of for that certain website. financial our measures found should to in and the that today, calculated filed GAAP. measures. prepared in accordance Form press refer report considered equivalent will is Investor be call, not These financial in our available non-GAAP isolation section also discuss as A to exhibit SEDAR to X-K measures be with non-GAAP GAAP. not a earnings reconciliation substitute release

call our and Dana Tim interim Conder; CEO, On CFO, today's are Arvidson.

prepared following be not will Q&A conducting remarks. our We

in be results. and/or our During provide to advised provide or may greater today's the into metrics financial may we remarks, may our insight that not to Please future. prepared business we additional continue offer metrics these

With CEO, now the that, over call Conder. our Interim I turn will to Tim

Tim Conder

a few to you, good all a quarter turning Thank and to it remarks provide today. everyone. speak to you before want financial I pleasure cover our to over afternoon, with Dana results. first Lynn, It's

As we TILT in to continue deeply I TILT. I Executive Interim been of April the and success on announced subsidiaries. of and XX, have its step agreed officer as committed to have Chief be to

a unfamiliar of you introduce to me and myself. with moment like my For who to those are take background, I'd

ways, cannabis Logistics, leader, customers TILT in when recently over Coast as distribution years member eight several founded Blackbird initially XXXX, Directors. involved then, delivery I and nationwide. clients as career Board my growing TILT. by In millions serving as of of I acquired was of with started serve President have a company's COO, Blackbird West and of a ago to I company and and in business the unit hundreds been a Since and most the the technology,

search You permanent CEO. may for about have a our questions

Directors. of Board The and Nomination and Governance Committee

committee future. may best the about we of questions to and have nomination The will TILT person Directors for CEO. search lead working that find to governance and You into our ensure diligently permanent the a be Board

Stepping Advisor That day inhalation said, to are the ground, returned I’m relatively as TILT as our business. who teams transition announced getting we TILT Jupiter’s right at has working I reengaged today grateful make and back to been our has focused Scatterday, also be the company to success. on hard smooth a on to to am with a into is Senior Mark work who a

spent project, to revenue for I in with New time I partners dispensary York team and on with and weeks, Over visited the also our past Massachusetts poised our growth. our is where Little our operation met vertical Shinnecock Harvest two open optimization soon the Beach in Nation. the

the role, coming months customers, new into teams, the I be and will any our with with weeks digging As business. sites, spent and deep engaging our expect meeting visiting with our

With of certain our outlined our areas have teams. perspective I of a renewed for organization, focus

excellence. as $X Jupiter with to of such rationalization million for measures. cash pressures and expansion for a industry Therefore, other business TILT need plant great This where far earnest only operational cannabis headcount already we vendor generation. optimization annual. is in the across per our employee prevalent First, the was XXXX. touching immune business reductions, not cutting look exceeds in it We cost example our that as imperative revenue begun has margin market optimize and

Second, the right must in the right consumers, selling right portfolio products, We price. that optimization. ensure markets, are right the cannabis product the at to we

We and to uncovering the our revenue. rigor are assortment already that evaluation expand margin grow and of introducing may are strategy, product opportunities we

Turning now businesses to our an plant and update. touching for hardware

Let Jupiter. me start with

in Founder business the senior role former business stepped ensure has inhalation Jupiter’s up success. set our and and mentioned long-term back I for Mark to As CEO Scatterday, a hardware that is advisory earlier, into

focused we to a new leading a Together, customer applying strong best-in-class with build product partnership guidance, innovation. service. have Smore resources will research position our with toward offerings Mark’s we and With partner. Jupiter product will and existing CECL and continue our manufacturing be inhalation

at toward at goal and of market. with are forward the We accelerating working launching The our product the of new look which our we announced end We quarter, sharing the fourth more will to team soon. with the partnership. innovative increasing Smore in Jupiter be strengthening collaboration products

March. premiere in the with launched a the moving to touching partnership business. Massachusetts Coda market June. the launch Coda plant Now, We Ohio market chocolates to TILT’s their side plan in to by of Signature high-end chocolatier bringing We new

overall and researching our right-sizing of new to skews a the top opportunities efficiencies. related product bottom end-to-end addition, purchase In and and contain to to brand review cultivation bulk plan pathways exploring costs as partner are to maximize currently we our new products, impact launches, and developing of margin doing part gain

of position additional for three brands markets we look all opportunity when touching success soon. build in to and still to how by is decisions our We in data-driven our sharing TILT and/or will on forward SKUs making and the there market. more early plant believe I unrealized

I’d the our over now like detail. review more to Dana to performance financial call to turn in

Dana Arvidson

everyone. and Thanks, afternoon, Tim, good

presented all As in dollars on and today results a basis reminder, are U.S. otherwise. a stated year-over-year unless

into in XXXX the first Now, results. essentially jumping million, our $XX.X Revenue quarter flat last was year. from of

million year operations, revenue quarter first the million business, our to period. first compared the to we $XX.X in in quarter cannabis For the million $XX.X revenue hardware $XX.X in $XX in ago And our million was generated compared of XXXX. in

XX% the decrease The our in margin in business, price partially year ago due was compression gross to an QX in hardware Massachusetts was in by to increase XX% margin margin period. in offset gross Gross primarily which compared was less in totaled the expenses, to first compared a $XX.X million charges period. lower quarter or costs. of non-cash adjustments compensation, stock in input impairment ago and a function $XX.X depreciation year million amortization Operating and in

these by provide eliminating administrative increase future process expense higher in extraneous drove in general headcount evaluating expenses possible. costs quarters. and The retail We'll goal you and operating base of Massachusetts. our with the $XXX,XXX management also of one-time on primarily increased efforts was the is G&A Several expenses year-over-year. an approximately in update driven with wherever TILT up

of gain cultivation in was improvement ago $XX.X to one-time of Haven, sale-leaseback period. February, million of net facility, manufacturing White XXXX. the $X.X a quarter closed million, sale The by Net which our in assets loss Pennsylvania compared the was first on a year primarily driven to loss relating in a and

aforementioned $X.X a QX in EBITDA OpEx by positive the $XX,XXX million negative was and was to year-over-year. ago year margin in compared Adjusted increase in decrease decline gross quarter. The mainly driven in the

debt December cash, equivalents, by Total ago million operations quarter. the to of million the $X.X was XXXX. company million, at At $X.X XXXX the XXXX. $X.X year provided December at modestly $XX.X in of lower March $XX.X quarter million XX, Cash was cash March than in compared restricted had XXXX, to compared million the cash first $X.X XX, XX, million, at XX, net XXXX, and

We transactions credit date. our You credit to our first turns, we this amended may recall, revolving several existing of the availability, announced fortify maturity facility the extend in balance quarter to and sheet. year, improve increase

maturity, We Pennsylvania and make used proceeds to million secured our cultivation $XX note near-term repay series were payment also transaction alleviated XXXX in full the and this announced a that debt The of a to leaseback our of of our facility. senior manufacturing holders. sale transactions substantial note including a junior

February date Together to our XXXX. the junior Finally, now non-revolving in transactions of December we maturity secured us steps our million in XXXX, occurring are reduce debt of allowed which senior and $XX.X March from these revised as in mature $XX.X XXXX and million extended to with XXXX. the terms notes,

as cannabis Tim focused operational to positioning withstand prior not our in TILT be guidance management providing for And and will market. will call on As we mentioned challenging XXXX. a earlier, earnings increasing and evolving efficiencies to remain alluded

Tim. turn I'll it that, With to back

Tim Conder

Thank you, Dana.

I'm optimistic existing and support. about and we're future grateful for TILT's their shareholders continued our

With ahead. underway, line initiatives other improve the quarters optimization bottom cost we working the are and in reduction to our

And ground I take steps have continued we lastly, business importantly, thank Mark to the footing. welcomed most take want the confidence holders this to on like support who us also back and Scatterday and but financial and fold opportunity note I'd into employees thank hit their our our helped firm to for to as our me get running.

your call, the this will we take at in understanding as today. step call the As appreciate change I new I into mentioned not top structure I of role. this questions

all us Thank call. to for look our you with for of forward We speaking QX again today. joining you

Operator

This and you. call concludes webcast. Thank today's conference

participation. your disconnect your You this may you now time. for Thank lines at

TILT (TLLTF) 15 May 232023 Q1 Earnings call transcript